Cyprus, officially known as the Republic of Cyprus, is an island country situated in the Mediterranean Sea. It is a member of the EU and as such, it abides by the directives imposed by the Union. When it comes to the gambling industry in the country, we can say that most of its forms were not legalized up until 2012. With the implementation of the Betting Law of 2012, land-based gambling started being regulated in Cyprus, with this piece of legislation still being the law that governs gambling on the island.
To be able to conduct gambling activities in Cyprus, operators are required to apply for a license from the National Betting Authority. The gambling law of Cyprus went through several changes throughout the years but online gambling is still mostly unregulated. Despite that, as the local authorities are not taking any serious measures to prevent gambling on unlicensed websites, Cyprus players are often resorting to gambling with unregulated online operators.
Currently, the licensing body in Cyprus can issue two different types of gambling licenses to operators. The first one is for the purpose of authorizing land-based gambling activities, while the second one can license the organization of the few legal online gambling forms. Due to the elusive gambling definitions of the Cyprus law, however, many unlicensed gaming and betting sites welcome players and punters from the country.
History of Gambling in Cyprus
Before most forms of gambling became legal in Cyprus, there were only a few activities that were allowed to residents of the island country. In 1973, horse racing betting was legalized with the enactment of Law No.48. Later on, that law was amended several times throughout the years, providing better regulation for horse racing betting in Cyprus.
Lotteries were also legalized on the island thanks to the Lotteries Law which was implemented in 1983. It set up the legal framework for the regulation of the National Lottery and also banned private lotteries, with very few exceptions to the ban.
In 2004, Cyprus joined the EU and since this was a period during which gambling was not regulated in any way in the island country, EU member states that have licensed online gambling were often open to Cypriots as well. Such operations were possible on Cypriot territories thanks to the free movement of services principle that was adopted by the EU.
At that time, Cyprus had not implemented any laws that would regulate the market so officials regarded online gambling in the country as legal, with operations in Cyprus also being the norm. It was in 2012 that Cyprus implemented the Betting Law which started regulating the gambling industry in the island country.
Gambling is partially owned by the state, with private companies being allowed to apply for licenses that permit certain forms of land-based gambling. The law also provided definitions that gave a clearer differentiation between legal and illegal activities. The Betting Law also introduced the National Betting Authority, which is the body that regulates the gambling industry and issues licenses to gambling operators in Cyprus.
An amendment to the Betting Law of 2015 legalizes land-based casinos and gaming halls. At the beginning of casino licensing in Cyprus, the plan was to issue licenses only to a limited number of casino operators. It was also in 2015, that the Operation and Control of Casino Law was enacted, allowing any licensed casino operator to run up to four satellite casinos outside the casino resort owned by the licensee.
Gambling Regulations in Cyprus
As mentioned above, most forms of gambling in Cyprus were not legal until the enactment of the Betting Law in 2012. Nowadays, this is still the main piece of legislation that regulates the gambling industry in Cyprus. That being said, the law had to go through several amendments to legalize various forms of gambling and set up the legislative framework for the way the industry should be regulated.
Under the Betting Law, operators are required to obtain a license from the National Betting Authority, which was also introduced with the implementation of the Betting Law. While land-based gambling is legal in Cyprus, the law forbids online gambling, with very few exceptions.
As Cyprus is a part of the EU, it is required to be compliant with Article 56 TFEU (gambling directives of EU). According to these directives, operators from other countries should be allowed to apply for online gambling licenses and welcome players from all EU member countries. If this, however, is not the way the country regulates online gambling, foreign operators should be allowed to accept customers from the said country even without acquiring a license.
Currently, the law does not allow any other types of online gambling licenses except for sports betting. As this is clearly contradictory to the EU gambling directives, many international gambling operators have applied pressure to Cyprus, trying to convince the country to amend its current laws.
While the Betting Law was passed in 2012, its amendment in 2015 put a start to legal brick-and-mortar casinos and gaming halls in Cyprus. Under this piece of legislation, the legal age of gambling in the country is 18 years or older. That said, many casinos have decided to allow entry only to individuals who are 21+.
Online Gambling in Cyprus
While the island country has legalized various forms of gambling, online gambling is still not properly regulated by the law. Currently, operators are not allowed to apply for an online casino license and offer casino games to Cypriot players. The only exception to the ban on online gambling licenses is applied to sports betting. Betting operators are allowed to apply for online sports betting licenses and legally operate virtual sportsbooks in Cyprus.
The company OPAP, which has monopolized the lottery industry in the country, has also been allowed to operate an online sportsbook. That being said, Cypriots often prefer placing their wagers with private betting companies that have also been licensed by the National Betting Authority. The reason for that is that these companies are often offering a better selection of covered sports, with more competitive odds.
While online gambling with unlicensed operators is not legal under the current version of the Betting Law, many Cypriots can still place bets on foreign gaming and betting sites. Since Cypriot is a member of the EU, it is required to comply with the gambling directives of the EU. This is why foreign operators based in other EU countries can accept customers from Cypriot without facing any legal consequences.
The Cypriot government is also not taking any serious measures to restrict the traffic to unlicensed gaming and betting sites. This is why, although technically illegal, online gambling is becoming more popular in Cyprus, with recent studies showing that 22% of Cypriot youth is gambling online. These numbers surpass the average percentage of gambling participation among pupils in Europe (16%).
Gambling Regulator and Licensing in Cyprus
Whether it is online or offline gambling, operators who are requesting a permit to conduct a gambling business in Cyprus are required to apply for a license from the National Betting Authority.
As already mentioned, there are two types of gambling licenses issued by the Cypriot gambling licensing authority. The first one is known as Class A, covering the licenses issued to companies that operate land-based betting services, except for horse racing betting. This type of license is issued to brick-and-mortar casinos, slot halls, and land-based betting shops.
As online sports betting is also legal under the Cypriot Betting Law, the National Betting Authority can also issue a Class B license. This type of authorization enables operators to offer online sports betting services, with horse racing betting yet again being excluded.
The application fee for a license depends on the duration of the license. For instance, if an operator applies for a Class A or Class B bookmaker license, the annual fee for a single year will be €30,000, while a two-year period will require a fee of €45,000. The fee that is paid for a Class A license for an authorized agent is €2,000 for one year, €3,000 for two years, and €170 per month if the license is valid for less than a year. Lastly, the fee for a gambling premise license that permits operations in two or more premises is €2,000 for one year, €3,000 for two years, or €170 per month if the license is valid for less than one year.
Gambling Taxes in Cyprus
Both players and gambling operators in Cyprus are required to pay gambling-related taxes. The tax rates for the gambling industry are determined by the Law on the Taxation of Horse Racing Betting and Lotteries as well as the Betting Law. The winnings that players accumulate through gambling in Cyprus are considered as taxable income, with the standard tax rate being applied.
Licensed gambling operators are required to pay a general gambling tax of 13%, with the tax base being the gross gambling revenue that has been generated. The 13% tax can be dissected into a 10% tax, plus a 3% mandatory contribution to a charity. Two-thirds of the sum for charity contributes to different non-profit and charitable organizations while the remaining amount goes to programs for consumer protection as well as management and recovery from gambling addiction.
There is also a 20% tax that is paid on winnings from betting and lotteries conducted by OPAP, where winnings exceed the amount of €5,000. This tax is paid by the operator organizing the games/betting activities and not by the players. Meanwhile, casino operators are required to pay a 15% tax on the gross gambling revenue.
Gambling businesses are also required to pay other types of taxes such as a 25% corporate tax or VAT of 18%, levied on gambling, betting, as well as other types of wagering activities.
Most gambling activities in Cyprus had not been legalized up until 2012. Thanks to the implementation of the Betting Law of 2012, however, the process of gambling legalization had begun, allowing operators to apply for gambling licenses from the National Betting Authority. Even though the new law allowed some gambling operations, land-based casinos and slot hall operations were not legalized until 2015.
Thanks to an amendment in 2015, operators were allowed to apply for casino and slot hall licenses. Initially, the number of licensed casinos was very limited but rich and influential individuals managed to obtain casino licenses for most major hotel resorts in the country. With the permission of the operations of the so-called satellite casinos, the number of land-based gambling facilities in Cyprus rapidly increased.
While most forms of land-based gambling have been legalized in Cyprus, the country is still not allowing operators to apply for online gambling licenses. Sports betting, however, is an exception, allowing betting companies to obtain an online betting license from the National Betting Authority. While Cyprus is a member of the EU, the refusal to legalize online gambling is contradictory to the gambling directives of the EU. This leads to a very vague legal status of online gambling and increasing rates of Cypriots playing on unlicensed offshore casino sites.